London, UK (January 24, 2007)–Record labels have become digitally literate companies, selling an estimated $2 billion worth of music online or through mobile phones in 2006 (trade revenues), almost doubling the market in the last year, according to IFPI’s Digital Music Report 2007.
Digital sales now account for around 10 percent of the music market as record companies experiment and innovate with an array of business models and digital music products, involving hundreds of licensing partners. Among new developments in 2006, the number of songs available online doubled to four million, thousands of albums were released across many digital formats and platforms, classical music saw a “digital dividend” and advertising-funded services became a revenue stream for record companies.
However, despite this success, digital music has not yet achieved the “holy grail” of compensating for the decline in CD sales. Meanwhile, digital piracy and the devaluation of music content are a real threat to the emerging digital music business.
According to IFPI chairman and CEO John Kennedy, “The chief winners in the rise of digital music are consumers. They have effectively been given access to 24-hour music stores with unlimited shelf space. They can consume music in new ways and formats–an iTunes download, a video on YouTube, a ringtone or a subscription library.
“Yet the market remains a challenge. Other industries, such as film and newspapers, are struggling with the same problems that we have had to live with. As an industry we are enforcing our rights decisively in the fight against piracy and this will continue. However, we should not be doing this job alone. With cooperation from ISPs we could make huge strides in tackling internet piracy globally. It is very unfortunate that it seems to need pressure from governments or even action in the courts to achieve this, but as an industry we are determined to see this campaign through to the end.”